Board Charter

This Board Charter (“Charter”) has been adopted by the Board of Directors (“Board”) of Hock Heng Stone Industries Bhd.(“the Company”) and its subsidiaries (“the Group, in accordance to the Malaysian Code of Corporate Governance 2012 (“MCCG 2012”). The Board strives to collectively lead and is responsible for the success of the Group by providing entrepreneur leadership and direction as well as management oversight. The Board acknowledges that it is the ultimate decision making body of the Group.

This Charter sets out the composition, roles, responsibilities and processes of the Board and is to ensure that all Board members acting on behalf of the Group are aware of their duties and responsibilities as Board members.

2. Board Composition

The Board of Directors (“the Board”) should consist of qualified individuals of different range of skills, experiences and backgrounds and the size of the Board is such that it facilitates the making of informed and critical decisions for the Group, in accordance with the Boardroom Diversity policy established.Nomination and election of new director is governed by structured nomination and election process and delegated to Nomination Committee with ultimate responsibility and authority lies with the Board.

The Board is responsible to determine its optimised size in order to carry out is responsibility and authority effectively and efficiently. The evaluation of the potential candidate for new directorship and director nominated for re-election are delegated to Nomination Committee with recommendation being made to the Board for decision. On the new appointment of the new Director, such new Director is required to commit sufficient time in order to discharge his/her duty and responsibility with reasonable due care, skills and diligence.

The Board composition is governed by the Articles of Association of the Company. The Board shall comprise at least two (2) directors and not more than nine (9) directors, in accordance with Articles of Association of the Company. Furthermore, in order to assert independence element and check and balance role to the Board, at least two (2) Directors or one third (1/3) of the board (whichever is higher), shall be independent, In accordance with the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Main LR”)

The tenure of an Independent Director should not exceed a cumulative term of nine (9) years. Upon completion of the nine (9) years, such Independent Director may continue to serve on the Board subject to the director’s re-designation as a Non-Independent Director. Otherwise, the Board must justify and seek shareholders’ approval in the event it retains as an Independent Director.

The retirement and re-election of directors are in accordance to the Articles of Association of the Company, which provides that all Directors of the Company, including the Managing Directors are subject to retirement. At least one third in number of the Board and who have been longest in office are subject to retirement by rotation during the Annual General Meeting (“AGM”). A newly appointed director shall retire at the next coming AGM. A retiring Director is eligible for re-appointment.

3. Directors Remunerations

In consideration of the recommendation from Remuneration Committee, the Board is responsible to determine the level of remuneration of the Directors and Senior Management of the Group in such a manner to promote and support long term vision and strategies of the Group. Such remuneration structure shall attract and retain key personnel of requisite quality for long term value creation as well as motivating and incentivising Directors and Senior Management to perform their best for the Group. Remuneration package of Executive Directors shall not include an element of commission or percentage of turnover or profits.

Non-Executive Directors will be paid based on fixed fees commensurate with their responsibilities in the Board and Board Committees and their attendance at the meetings, subject to approval from shareholders. The determination of the remuneration package of Non-Executive Directors should be a matter for the full Board, with individual Director concerned should abstain from discussion of their own remuneration. Remuneration package of Non-Executive Directors shall not include an element of commission or percentage of turnover or profits.

4. Board Responsibilities

The Board is responsible for the proper stewardship of the Group to provide reasonable assurance for the success of the Group on sustainable manner. The Board is tasked with realisation of long term and sustainable shareholders’ value and safeguarding the interests of stakeholders.

Roles, Responsibilities and Authorities of the Board

The Board assumes the following duties and responsibilities (but not limited to):

to review and approve the strategic business plans for the Group and monitoring of the implementation by the Management there from;

to oversee the conduct and the performance of the Group businesses;

to review and manage principal risks affecting the Group;

to review and ensure senior management team is of sufficient calibre and succession planning for senior management is put in place;

to review the adequacy and integrity of the Group internal control systems and management information system;

to approve the policies relating to corporate branding, public relations, investor relations and shareholder communication programmes;

to ensure compliance with applicable laws and regulations relevant to the Group’s operations;

to ensure full compliance and to carry out the duties of the Board in accordance with the relevant provisions of all applicable laws, regulations and guidelines;

to set corporate values and vision as well as clear lines of responsibility and accountability;

to approve the major changes to the corporate organisation structure and delegation of authority to the Management;

to establish and maintain the ethical standards through a code of conduct which will be applicable throughout the Group and ensure the compliance of this code of conduct;

to approve the appointment of Directors and senior executives and to review and recommend the removal of the Directors;

to put in place procedures to assess any related party transactions or conflict of interest situation within the Group;

to establish relevant board committees in order to carry out specific board responsibilities effectively while the Board assumes the ultimate responsibility for such board responsibilities. Such board committees are governed by terms of reference approved by the Board and the conduct of such board committees are monitored by the Board by receiving minutes and/or reports from such board committees;

to ensure adequate trainings are provided to the members of the Board;

to conduct a Board and Board Committee evaluation through the Nomination Committee comprising of Board Assessment and an Individual Assessment;

to establish formal and transparent remuneration policies and procedures to attract and retain directors through Remuneration Committee.

5. Role of Chairman and Managing Director

The Chairman of the Board shall be appointed by the Board and shall be independent and Non-Executive Director who is responsible for the governance, orderly conduct and effectiveness of the Board while Managing Director is responsible to ensure proper execution of strategic goals and effective operation within the Group. The Chairman represents the Board to the shareholders and to act as facilitator at the meetings of the Board and ensure that no board member dominates the discussion, and that appropriate discussion takes place and that relevant opinion among Board members are forthcoming.

The followings are the responsibilities of the Chairman of the Board:

to provide governance in matters requiring corporate justice and integrity;

to oversee the Board in the effective discharge of its responsibilities;

to lead the Board in the oversight of the Management and ensure its effectiveness of all aspects of its role;

to ensure the efficient organisation and conduct of the Board’s meetings;

to ensure that quality information to facilitate decision-making is delivered to Board members on a timely basis;

to facilitate the effective contribution of all Directors at Board meetings;

to promote effective communication among the Board members and with shareholders and relevant stakeholders;

to chair general meetings of shareholders; and

to maintain effective professional relationship with external parties, investing public and regulatory bodies.

Managing Director is accountable to the Board for the achievement of the corporate objectives and for the observance of management authorities. Managing Director shall be head of the Management of the Group and answerable to the Board in that manner.

The responsibilities of Managing Director are as follows:

to develop corporate strategies for the Group for the Board’s approval and to implement such corporate strategies for the Group so approved;

to implement other Board’s decision effectively and efficiently;

to ensure the efficiency and effectiveness of the day-to-day operations of the Group in accordance with authorities and delegations authorised by the Board;

to ensure effective internal and external reporting of the Group;

to ensure compliance with applicable laws and regulations;

to communicate material and relevant matters to the attention of the Board timely and accurately for decision making; and

to discharge the responsibilities delegated by the Board and to execute authorities delegated by the Board, effectively and efficiently.

6. Board Committees

To assist the Board to discharge its duties and responsibilities, the Board has delegated certain functions to the following Board Committees. These Board Committees operate under the defined terms of reference and the Chairman of these Board Committees will report to the Board during the board meetings on the matters that require the Board attention.

Audit Committee

Nomination Committee

Remuneration Committee

7. Company Secretaries

The Company Secretaries of the Group is responsible for the compliance of listing and related statutory obligation, recording of minutes as well as one of the sources of information and provide advice to the Board and relevant board committees on issues relating to compliance with laws, rules, procedures and regulations that may affect the Group. The Board as a whole is responsible for appointment and removal of Company Secretaries.

8. Board Activities

a. Board Meetings

The Board shall conduct meetings at least four (4) times a year or more frequently as circumstances dictate. Unless otherwise agreed, notice of each meeting confirming the venue, time and date, together with an agenda of items to be discussed, shall be forwarded to each member of the Board no later than seven (7) days before the date of meeting. Reasonable time should be given for Board members and to other attendees as appropriate, to consider all relevant papers and materials prior to the Board meeting.

Chairman of the Board meeting shall be the Chairman to the Board and in the absence of the Chairman and/or an appointed deputy in any meeting, the remaining members present shall elect one of themselves to chair the meeting in accordance with the provisions set out in the Articles of Association.

The quorum for meetings shall be two (2) members in accordance to Articles of Association. A duly convened meeting of a Board at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretion vested in or exercisable by the Board.

The Board may invite external parties such as Senior Management, auditors, solicitors or consultants to brief and clear the Directors’ doubt or concern as and when the need arises. External parties invited may attend part or all of the Board Meeting at the discretion of the Board.

The Company Secretaries of the Company shall record minutes of the meetings for circulation to the Committee members which will be confirmed and signed by the Chairman of the meeting as correct proceedings thereat in the next scheduled Board meeting unless otherwise determined.

b. Directors’ Training

The Board recognises the importance of continuous education of its members in order for its members to discharge their responsibilities and duties effectively.

The Board shall continuously assess and determine the training needs of its individual members and ensure that the members of the board received relevant updates and training to update individual directors’ knowledge and enhance their skills to effectively discharge their duties.

c. Directors’ Remuneration

The Board will determine the level of remuneration of Board members, taking into consideration the recommendations of the Remuneration Committee, in accordance with structured directors’ remuneration policy established by the Board.

Non-Executive Board members will be paid a basic fee as ordinary remuneration and they will also be paid a sum based on their responsibilities in Board committees and for their attendances at meetings. The fee which is subject to the approval of the shareholders, shall be fixed in sum and not by a commission or on percentage of turnover or profits.

d. Board and Member Assessment

The Board delegated the annual assessment of effectiveness of the Board as a whole, individual members and its Board Committees to Nomination Committee. Nomination Committee is required to carry out the assessments, at least once per financial year, in accordance with the structured assessment process established by the Board and to report annually assessment of the full Board and individual Board members for review and discussion for further improvement.

e. Access to Independent Professional Advises

In discharging the Board’s responsibilities, individual director and the Board collectively is entitled to obtain independent professional advises at the expense of the Company.

f. Supply of Information

The Directors are supplied with information on a timely basis. The Board paper and relevant information shall be given to the directors by the Management in such manner and through communication medium that Board members are allowed sufficient time to review such Board paper and relevant information in order to discharge their responsibilities effectively. They may request additional information or clarification from the Management shall the need arises. The Board has unrestricted access to any information pertaining to the Group. Members of the Board are regularly updated should there be any new statutory and regulatory requirements.

The Directors acknowledge that confidential information received in the course of exercise of the Board duties remains the property of the Group. It will not be disclosed unless either the Chairman of the Board has so authorised in writing or disclosure is required by law.

9. Relationship of the Board with the Management

Board members should be given unrestricted access to the Group’s Management and to the information pertaining to the Group. Any contact with the Group’s Management shall be made through Managing Director in order to minimise the disruption to the day-to-day operations of the Group.

All Board’s authorities conferred on the Management is delegated through the Managing Director so that the authority and accountability of the Management is considered to be the authority and accountability of Managing Director so far as the Board is concerned.

10. Relationship with Shareholders and Investors

The Board shall ensure effective communication of the information on operations, activities and performance of the Group to the Shareholders and other stakeholders via the following channel:

Annual Report which contains the financial and operational review of the Group’s business, corporate and financial information and the information on the Board and Committees;

Announcement made to Bursa Malaysia; and

Company website which contains information of the Company such as products and activities.

The corporate disclosure with the stakeholders is regulated by Corporate Disclosure Policy established by the Board.

11. Review of the Charter

The Charter would be periodically reviewed and updated in accordance with the needs of the Company and any new regulations that may have an impact on the discharge of the Board’s responsibilities. Subsequent amendment to the Charter can only be approved by the Board.